This is a bid to enrich company shareholders at the expense of Ohio customers. It belies the frequent claims of company CEO Jim Rogers that he is concerned about how new global warming legislation could affect the company’s customers. What he’s really concerned about is the company’s bottom line.

As reported below, Duke Energy of Ohio is challenging a new state energy law and has filed a request with FERC to move ownership of its power plants to unregulated companies owned by the North Carolina-based parent company.

At the same time, Duke continues to press for Congress to give away free carbon permits – something that would give this company a windfall. And, amazingly, Duke is also reported to be part of a coal cabal seeking to sideline the Lieberman-Warner climate bill and replace it with an alternative plan based on giving away even more federal money to coal-based operations!

All of these antics have one common thread: to boost the value of Duke’s stock. Concerns about customers or the environment seem ever more like a mirage.

Ohio Regulator Says Duke Filing 'Suspect'

29 April 2008Power Market Today

Duke Energy Ohio Inc. has challenged a new state energy and utility law and filed a request with FERC to move ownership of its power plants to unregulated companies owned by parent company Duke Energy Corp., which is headquartered in North Carolina.

Duke Energy Ohio filed the request with the Federal Energy Regulatory Commission (FERC) last week after the Ohio Senate approved an energy bill endorsed by Gov. Ted Strickland (see Power Market Today, April 24; Oct. 12, 2007). The new law specifically prohibits utility transfers of ownership unless the Public Utilities Commission of Ohio (PUCO) agrees to the transfer.

If Duke Energy Ohio's request were approved by FERC, the ownership transfer would allow Duke to base its retail rates on wholesale markets. Although the timing was questioned by consumer groups, a Duke spokesman said the company still planned to file a long-term rate plan with PUCO.

PUCO's chairman questioned Duke's timing.

"The motive behind the timing of Duke's announcement is, at best, suspect," said PUCO Chair Alan R. Schriber. "Nevertheless, we believe that it is important to intervene at the FERC on behalf of the electric ratepayers of Ohio and to ensure that Duke's filing is not an attempt to skirt our recently passed legislation, Substitute Senate Bill [SB] 221."

PUCO's order on remand, which affirmed Duke's rate stabilization plan, prohibits the company from divesting its generating assets through the end of 2008, Schriber noted. In passing SB 221, the Ohio General Assembly extended this prohibition into 2009 and beyond. The bill specifically states that no electric distribution utility can sell or transfer generating assets without obtaining prior PUCO approval.

Friday, April 25, 2008

Twelve governors (California, Arizona, Connecticut, Maryland, Massachusetts, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Vermont and Washington) have to congressional leaders and the President, protesting the disgusting move this week by the federal Department of Transportation, which is seeking to preempt these and other states from enforcing greenhouse gas standards for motor vehicles.

As the letters note, the Bush administration once again is making a cynical attempt to re-write the Clean Air Act and to take away a fundamental states’ right.

**

This issue, of course, involves the ongoing conspiracy between the Bush White House and the car industry to kill the California car standards. But another interesting greenhouse gas drama is starting to play out in California – and it could have a ripple effect on Congress.

Little known to many of us, a lot of the power sold in California actually comes from coal. As the Times put it “some taxpayer-owned utilities, such as Los Angeles' Department of Water and Power, get close to half their electricity from the nation's dirtiest energy source: coal.”

And – as at the federal level – there is an interesting battle in California to determine how to apportion carbon pollution permits, or allowances. In this case, the Los Angeles Department of Water and Power sounds like Duke Energy or American Electric Power: it is arguing that carbon permits should be given out based on historic pollution levels! This position, of course, is directly against the position that California officials presented to Senate leaders last fall, as they argued that emission permits should be auctioned off rather than given away to the biggest polluters. California put it very eloquently in that paper: “free distribution based solely on historical emissions will only serve to reward the biggest polluters at the expense of consumers.”

Keep your eye on this debate. If California caves in to political pressure from the coal-happy crowd, it could have a real influence on the congressional debate.

Tuesday, April 22, 2008

Reps. Waxman, Markey, and Inslee have sent a dear colleague laying out principles for global warming legislation in a letter addressed to Speaker Pelosi and requesting Members to join them on the letter.

Among the key points:

1) global warming targets should be based on science (you'd think a no-brainer until you talk to the would-be deal cutters);

2) states should not have their rights taken away; and

3) carbon permits should be auctioned rather than given to big polluters (see #1, above)

So much fluff has been written about Earth Day that we hesitate to take fingers to keyboard. Still, there is real news amid the fluff. And so we offer a few thoughts.

Smog slam! The National Academies of Science are out with a new report on the connection between smog and premature death. The NAS confirms that breathing smog can shorten your life. This report is a rebuke to the Bush administration, which has consistently tried to downplay the connection between smog and premature death. (You will recall that the White House Office of Management and Budget has ordered EPA to remove suggestions of this connection from several analyses, including EPA’s long-delayed small-engine standards.)

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Duke double-speak: More on the theme of pollution and premature death: Perhaps the single most prominent corporate voice in the congressional global warming debate is that of Duke Energy CEO Jim Rogers. We examine some of Duke’s positions in a short white paper. Note, by the way, that while professing to be a “good guy,” Duke has been a leader in efforts to void the EPA’s much-touted “clean air interstate rule.” If Duke succeeds – and some odds makers are giving them pretty good chances – thousands of extra people could die unnecessarily each year from breathing dirty air.

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Fresh air, or at least Clean Skies: Yes, we would like to welcome the long-awaited arrival of http://www.cleanskies.tv/, a new web-based energy news channel. It should contain much interesting and sometimes-provocative programming, including a panel discussion including a battle of the titans. (OK, it’s really Frank Maisano and myself, but we both hope you watch.)

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State of the Air: A prominent partner of the Clean Skies initiative is the American Lung Association, which is preparing for the rollout of its annual “State of the Air” report. And this year, there’s a surprise! Official release date is May 1.

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Snow season: The timing seems a little off, with spring in full bloom, but the White House Office of Management and Budget reports it has begun to review new EPA air pollution standards for snow blowers. Stay tuned.

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Farm fresh? To go back to our smog theme, you will recall that the U.S. Department of Agriculture vigorously fought efforts by the EPA to set tougher smog standards. But that’s not the department’s only anti-clean air initiative. We recently learned about a program called “Fuels for Schools and Beyond,” which is giving grants to schools especially in Northeast, Midwest, and the West to replace their natural gas and other powered heating systems with wood burning systems (300 such conversions in WI alone) or “biomass.” There are no environmental requirements on the wood-burning systems and they are also sized just under the requirements for air quality permitting locally. This could be a very big source of fine particle emissions. It is, of course, ironic that many of us have been fighting for money to clean up dirty diesel school buses, while the USDA is pressing to expose kids to more pollution. Happy Earth Day.

Friday, April 18, 2008

It’s a lovely Friday in our nation’s capital, but it’s being marred by the emissions of a new lobbying blitz by car companies and car dealers. They held a press briefing today. The target here is any attempt to reinstate the right of California and other states to set greenhouse gas standards for motor vehicles.

There they go again! The same companies that literally fought for decades against better fuel economy standards now claim new standards enacted by Congress are just peachy.

They are being extremely disingenuous. They are spending on lawyers and lobbying instead of better engineering. And, if they have their way, consumers will suffer. (Note, by the way, that in Canada, the car companies are calling on the government to raise gasoline prices! Keep that in mind when you hear them whine that all they care about is the consumer!)

The car lobby got to the Bush administration (you will recall the administration’s decision to reject the California standards amid a hail of lies, despite the legal and technical advice of EPA’s professionals). But now they are trying to seal the deal with Congress.

--One, they claim that the California greenhouse gas standards are “fuel efficiency” standards. That is literally not true, as you will recall if you’ve read the Supreme Court case or the federal decisions in Vermont and California which rejected this bogus argument. The California standards are designed to reduce greenhouse gas emissions. A side effect would be to improve fuel economy.

--A second big lie: that state adoption of the California standards would create a “patchwork” of state standards. That’s completely false. Under the Clean Air Act, states can adopt California car emission standards, or stick with federal standards. There are only two choices. There isn’t a third.

Would adoption of the California standards bump up compliance costs for car makers? Yes, a little. And it might lead to some pass-through added costs for new cars. Note the testimony this month in Minnesota (another battleground, where car makers are trying to block that state from adopting the California standard) in which the California Air Resources Board testified that the Cal standards would add about $1,000 to vehicle price – but that it would be offset in three years by the savings consumers would get for better gas mileage.

Why are the car companies so afraid of making cars that would save consumers money in the long run?

We wish they would spend less on lawyers, lobbying and propaganda -- and more on making cleaner cars.

Wednesday, April 16, 2008

These principles are almost laughable. The President is about 8 years behind the curve. (He himself endorsed the concept of power plant emission limits 8 years ago, only to disavow the idea once in office.)

An initial and apparently more specific Bush trial balloon was shot down by key Congressional Republicans.

These new comments appear to be little more than a thin rationale for a Parisian junket by some members of his administration. Perhaps the appropriate reaction should be “sacre bleu!” (though the Pope might find that inappropriate).

The President’s comments are likely to be used in the following manner:

Senator Boxer will claim the President’s remarks add momentum to the Lieberman-Warner plan because at least the President supports something, however anemic. At the same time, however, he has signaled staunch opposition to the Lieberman-Warner plan, so his comments could give cover to those who seek to water it down further.

Indeed, there are rumors that Senator Voinovich is working on an extremely weak and coal industry-friendly climate amendment, coupled with proposals to weaken the Clean Air Act. Voinovich could well cite the White House as he moves forward. The Bush administration, of course, has also sought to weaken key elements of the Clean Air Act. (And has mostly failed. You will recall the Orwellian “Clear Skies Act” and the “new source review” power industry loophole that ended in a court fiasco for the administration.)

This may goose key members of the House – namely Reps. Boucher and Dingell – who appear to be moving on a slow track.

Given the complexity of the issue, however, it seems almost certain that any new climate law will be signed by a future president.

This afternoon the President will deliver a statement in which he sets a new intermediate national goal for stopping the growth of greenhouse gas emissions. The President’s announcement comes as this week’s Major Economies Meeting in Paris begins to lay the groundwork for the world leaders’ climate meeting to be held in conjunction with the upcoming G-8 Summit.

The President’s remarks will also inform the Senate-scheduled debate on climate change legislation. In addition, the President will emphasize the importance of decisions on climate change regulation being openly debated and made by the elected representatives of the people rather than unelected regulators and judges.

Following are excerpts from the President’s statement, as prepared for delivery:

On the principles for effectively confronting climate change:

Over the past seven years, my Administration has taken a rational, balanced approach to these serious challenges. We believe we need to protect our environment. We believe we need to strengthen our energy security. We believe we need to grow our economy. And we believe the only way to achieve these goals is through continued advances in technology.

I have put our Nation on a path to slow, stop, and eventually reverse the growth of our greenhouse gas emissions. In 2002, I announced our first step: to reduce America’s greenhouse gas intensity by 18 percent through 2012. I am pleased to say that we remain on track to meet this goal even as our economy has grown 17 percent.

When I took office seven years ago, we faced a problem. A number of nations around the world were preparing to implement the flawed approach of the Kyoto Protocol. In 1997, the United States Senate had passed a resolution opposing this approach by a vote of 95 to zero. The Kyoto Protocol would have required the U.S. to drastically reduce greenhouse gas emissions. The impact of this agreement would have been to limit our economic growth and shift American jobs to other countries while allowing major developing nations to increase their emissions. Countries like China and India are experiencing rapid economic growth which is good for their people and good for the world. But this also means that they are emitting increasingly large quantities of greenhouse gases which has consequences for the entire global climate. So the United States has launched, and the G8 has embraced, a new process that brings together the countries responsible for most of the world’s emissions.

On the new goal:

In support of this process, and based on technology advances and strong new policies, it is now time for the U.S. to look beyond 2012 and take the next step. We have shown that we can slow emissions growth. Today, I am announcing a new national goal: to stop the growth of U.S. greenhouse gas emissions by 2025.

To reach this goal, we will pursue an economy-wide strategy that builds on the solid foundation we have in place. As part of this strategy, we worked with Congress to pass energy legislation that specifies a new fuel economy standard of 35 miles per gallon by 2020, and requires fuel producers to supply at least 36 billion gallons of renewable fuel by 2022. This should provide an incentive for shifting to a new generation of fuels like cellulosic ethanol that will reduce concerns about food prices and the environment. We also mandated new objectives for the coming decade to increase the efficiency of lighting and appliances.

Taken together, these landmark actions will prevent billions of metric tons of greenhouse gas emissions from entering the atmosphere.

To reach our 2025 goal, we will need to more rapidly slow the growth of power sector greenhouse gas emissions so that they peak within 10 to 15 years, and decline thereafter. By doing so, we will reduce emission levels in the power sector well below where they were projected to be when we first announced our climate strategy in 2002. There are a number of ways to achieve these reductions, but all responsible approaches depend on accelerating the development and deployment of new technologies.

On the problem of outdated regulations being applied to climate change:

As we approach this challenge, we face a growing problem here at home. Some courts are taking laws written more than 30 years ago to primarily address local and regional environmental effects, and applying them to global climate change. The Clean Air Act, the Endangered Species Act, and the National Environmental Policy Act were never meant to regulate global climate change. For example, under a Supreme Court decision last year, the Clean Air Act could be applied to regulate greenhouse gas emissions from vehicles.

If these laws are stretched beyond their original intent, they could override the programs Congress just adopted, and force the government to regulate more than just power plant emissions. They could also force the government to regulate smaller users and producers of energy from schools and stores to hospitals and apartment buildings. This would make the federal government act like a local planning and zoning board, and it would have crippling effects on our entire economy.

Decisions with such far-reaching impact should not be left to unelected regulators and judges. Such decisions should be debated openly and made by the elected representatives of the people they affect. The American people deserve an honest assessment of the costs, benefits and feasibility of any proposed solution.

On the wrong way and the right way for Congress to approach climate change legislation:

This year, Congress will soon be considering additional legislation that will affect global climate change. I believe that Congressional debate should be guided by certain core principles and a clear appreciation that there is a wrong way and a right way to approach reducing greenhouse gas emissions. Bad legislation would impose tremendous costs on our economy and American families without accomplishing the important climate change goals we share.

The wrong way is to raise taxes, duplicate mandates, or demand sudden and drastic emissions cuts that have no chance of being realized and every chance of hurting our economy. The right way is to set realistic goals for reducing emissions consistent with advances in technology, while increasing our energy security and ensuring our economy can continue to prosper and grow.

The wrong way is to jeopardize our energy and economic security by abandoning nuclear power and our Nation’s huge reserves of coal. The right way is to promote more emission-free nuclear power and encourage the investments necessary to produce electricity from coal without releasing carbon into the air.

The wrong way is to unilaterally impose regulatory costs that put American businesses at a disadvantage with their competitors abroad which would simply drive American jobs overseas and increase emissions there. The right way is to ensure that all major economies are bound to take action and to work cooperatively with our partners for a fair and effective international climate agreement.

On technology as the key to addressing climate change:

We must all recognize that in the long run, new technologies are the key to addressing climate change. But in the short run, they can be more expensive to operate. That is why I believe part of any solution means reforming today’s complicated mix of incentives to make the commercialization and use of new, lower emission technologies more competitive.

First, the incentive should be carbon-weighted to make lower emission power sources less expensive relative to higher emissions sources, and it should take into account our Nation’s energy security needs.

Second, the incentive should be technology-neutral because the government should not be picking winners and losers in this emerging market.

Third, the incentive should be long-lasting. It should provide a positive and reliable market signal not only for the investment in a technology, but also for the investments in domestic manufacturing capacity and infrastructure that will help lower costs and scale up availability.

On putting America on an ambitious new track for greenhouse gas reductions:

If we fully implement our strong new laws, adhere to the principles I’ve outlined, and adopt appropriate incentives, we will put America on an ambitious new track for greenhouse gas reductions. The growth in emissions will slow over the next decade, stop by 2025, and begin to reverse thereafter, so long as technology continues to advance.

The strategy I have laid out today shows faith in the ingenuity and enterprise of the American people – and that is one resource that will never run out. I am confident that with sensible and balanced policies from Washington, American innovators and entrepreneurs will pioneer a new generation of technology that improves our environment, strengthens our economy, and continues to amaze the world.

Monday, April 14, 2008

It is probably an overstatement to characterize the conservative Washington Times newspaper as the Bush Administration’s Pravda, but the paper often has seemed a lot closer to the President than many other news organs, and even has been suspected of being a launching pad for trial balloons.

Specifics of the policy are still being fiercely debated, but Bush administration officials have told Republicans in Congress that they feel pressure to act now because they fear a coming regulatory nightmare. It would be the first time Mr. Bush has called for statutory authority on the subject. "This is an attempt to move the administration and the party closer to the center on global warming. With these steps, it is hoped that the debate over this is over, and it is time to do something," said an administration source close to the White House who is familiar with the planning and who said to expect an announcement this week.

This flurry comes on the eve of an April 17-18 meeting in Paris with other major economic powers (see below). Climate is expected to be one issue on the table, though up to this point, the meeting looks very much like a junket.

There is a related rumor that the administration is considering a power sector-only plan.

If so, I suspect it would be DOA, since it is about eight years too late. (You may recall that in 2000, candidate George Bush endorsed such an approach, only to reverse course once in the White House’ leaving his first EPA chief, Christie Whitman, with egg on her face.)

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From: Hellmer, Kristen A. [mailto:Kristen_A._Hellmer@ceq.eop.gov] Sent: Friday, April 11, 2008 10:55 AMTo: FN-CEQ-PressSubject: U.S. Announces Delegation To Third Major Economies Meeting on Energy Security and Climate ChangeImportance: HighCouncil on Environmental QualityExecutive Office of the President

U.S. Announces Delegation To Third Major Economies Meeting on Energy Security and Climate Change

As part of President Bush’s continued international energy security and climate change initiative, the world’s major economies plus the United Nations, have been invited to Paris, France for the third Major Economies Meeting. The two-day meeting will further the shared objectives of reducing greenhouse gas emissions, increasing energy security and efficiency, and sustaining economic growth, and will help to advance the negotiations under the UN Framework Convention on Climate Change.

Who: Chairman James L. Connaughton, White House Council on Environmental QualityDaniel M. Price, Assistant to the President for International Economic AffairsPaula Dobriansky, Under Secretary of State for Democracy and Global AffairsAlexander Karsner, Assistant Secretary for Energy Efficiency and Renewable EnergyC. Boyden Gray, Special Envoy for European Union Affairs(plus other technical experts)

A second scoring question involved the emissions allowances that are given away at no charge. In CBO’s view, these should also be recorded in the budget as revenues and outlays. The government is essential to the existence of the allowances and is responsible for their readily realizable monetary value through its enforcement of the cap on emissions. The allowances would trade in a liquid secondary market since firms or households could buy and sell them, and thus they would be similar to cash. CBO estimates that the value of the market created by the major cap-and-trade program would be large, exceeding $100 billion in 2012. Therefore, CBO considers the distribution of such allowances at no charge to be functionally equivalent to distributing cash.

Thursday, April 10, 2008

You could perhaps have guessed this was coming. EPA’s independent science advisers have once again slammed Steve Johnson for the agency”s weak smog standards. See link below to their letter.

Some of the relevant language: "the members of the CASAC Ozone Review Panel do not endorse the new primary ozone standard as being sufficiently protective of public health."

The letter also emphasizes that “a change in the form of the secondary standard was scientifically well-justified." (You will recall the White House intervened to block the change sought by EPA. That was a victory for agricultural interests, which had lobbied against the change.)

The science advisers express hope that the next head of the EPA will do better.

But this was a real missed opportunity to follow the science and protect both people’s health and the environment.

Today, Rep. Henry Waxman issued a subpoena to compel EPA to provided “unredacted” copies of documents that have been withheld from Waxman’s oversight committee. See below.

You have to be impressed at the methodical nature of Waxman’s investigation of this dirty decision.

Will the Bush administration try to invoke “Executive Privilege?” That would be an admission that the White House meddled in a decision that was supposed to be up to EPA.

And will the Bush administration try to retaliate against EPA whistleblowers? (Some House Republicans led by Tom Davis of Virginia appear to be trying to retaliate. C’mon Tom! Go get your lobbying job and stop wasting tax money!)

Chairman Henry A. Waxman today issued a subpoena to compel EPA to provide unredacted copies of documents involving the White House that have been improperly withheld from the Committee regarding EPA’s decision to reject California’s efforts to reduce greenhouse gas emissions from automobiles. The subpoena compels production of approximately 100 EPA documents involving the White House. Chairman Waxman released the following statement:

“The Committee has found evidence that EPA officials met with the White House regarding California’s motor vehicle regulations. Subsequently, EPA blocked California from moving forward with its landmark program to address climate change. Unfortunately, EPA has refused to disclose the substance and extent of its communications with the White House. The Committee must have these documents in order to understand how the agency’s decision was made.”

Monday, April 07, 2008

Yes, they are at it again. The car companies and car dealers are once again trying to kneecap California and other states by taking away their rights to set better global warming emission standards for motor vehicles.

Yes, the Bush administration did reject California's bid, but EPA's attorneys believe California will prevail in court. Hence the new push by the car crowd to build a fire wall in Congress.

In a March 25 power point presentation, said to be made to "Blue Dog" Democrats, the U.S. and international car companies and car dealers repeated tired old arguments (such as the one claiming the California standards would amount to a "patchwork" of different standards; a "patchwork" of two?).

The car companies admit the California standards would be tougher (remember when EPA Administrator Steve Johnson lied about this?), but complained they would also be more expensive. (Not once you start factoring in how much less a consumer would spend on gas over time!)

The intention here is clear: to try to block pending legislation that would order EPA to grant the California waiver, and also to lay down a marker -- to assert that the car crowd will oppose comprehensive global warming legislation unless it preempts the rights of California and other states.

Thursday, April 03, 2008

I guess this was inevitable, given that Mississippi Governor Haley Barbour opposed tougher national smog standards (as did his local power company, Mississippi Power, a subsidiary of the ever-polluting Southern Company.)

Now a deputy attorney general in Mississippi is seeking other states to join in suing to block the tougher smog standards. (See e-mail, below.) It notes that Mississippi has been told that other states, including AL, LA, TX, ARK, GA, SC, IN, may be interested in joining the suit. (Interestingly, this guy’s boss, Mississippi Attorney General Jim Hood, is a Democrat.) Most of these states had lobbied against tougher standards, using thoroughly discredited arguments.

So here is a brief peek behind the curtain. Here’s how someone starts the ball rolling on a law suit.

I see the guiding hand of the coal-burning electric power industry behind this new effort. The irony, of course, is that the EPA standards were weaker than recommended by the agency’s science advisers. But this crowd seems bent on blocking all progress.

Mississippi would like to know if any other state AGs are looking into a possible suit against the EPA to stop enforcment of the new, more stringent Clean Air Act standards for ozone? They have been told that several states' governors, possibly, AL, LA, TX, ARK, GA, SC, IN, may be interested in filing such a lawsuit.

If you have any information to share, please contact Mike Lanford directly (601) 359-3680 or email mlanf@ago.state.ms.us

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